SOFT MINING CONDITIONS HAMPER AUSTIN ENGINEERING
Written on the 2 March 2015
SUBDUED conditions in the mining industry have impacted Austin Engineering Limited's (ASX:ANG) half-year results.
The mining and earthmoving equipment manufacturer posted a net loss after tax of $41.6 million, down from its $860,000 profit in the previous corresponding period.
The loss has been attributed to an impairment expense of $40.88 million, after assessing the recoverable amount from its operations in Chile, Peru, Hunter Valley and Mackay.
Half-year revenue was down four per cent from the previous period to $102.05 million, while earnings before interest tax depreciation and amortisation (EBITDA) lifted 10 per cent to $9.04 million.
Despite revenue and EBITDA remaining consistent with previous half-year results, Austin reported a slower workload in HY15 due to reduced capital expenditure in the mining sector.
CEO Michael Buckland says the company's performance was a reflection of stabilisation in the market.
"Despite the industry continuation of reduced expenditure while increasing production levels, the company was able to increase its gross margin percentage versus prior years," Buckland says.
Hire operations in Perth and Pilbara performed to budget and secured new clients, while Austin operations across the eastern seaboard suffered lower levels of activity in the coal mining sector.
Buckland says despite booming production levels, mining companies are continuing to focus on cost cutting and increasing equipment usage.
He says the company is uniquely positioned to provide maintenance services and productivity solutions as the needs of long-term clients change.
"Austin is very well positioned to capitalise on any increase by miners in replacement and new expenditure within a recovery cycle," Buckland says.
"We anticipate that customers will continue to be seeking productivity gains from their capital allocations for equipment that has exceeded its life cycle.
"Austin's range of customised products is designed specifically to customer specification to achieve productivity advantages."
ANG will continue to focus on product development to boost revenue, as well as apply for a number of major tenders launched in the coal industry.